Final Results
Guinness Peat Group PLC
28 February 2008
Guinness Peat Group plc
("GPG" or "the Company" or "the Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
CHAIRMAN'S STATEMENT
The 2007 net profit of £129 million is easily a record, eclipsing the 1999
result of £112 million which largely related to the sale of our Tyndall
subsidiary. The main components this time are the sales of shares in Australian
Wealth Management (AWM) and Premier Investments (subsequent to Premier's own
successful sale of its Coles Group holding). However, there are numerous other
plus and minus items which are important to the overall group result. Various
deals involving Green's Foods and Nationwide Accident Repair Services made
useful contributions and, of course, the Coats result was also important.
The biggest negative was Capral Aluminium which has obviously been a big
disappointment but, if we dare to say, there have been signs of real improvement
in recent months.
In the Interim Report, we expressed high hopes for the second half but, in the
event, it was not as good as anticipated. The EC decision in relation to Coats
was an unwelcome and unexpected blow. Although we were well aware of the
uncertainties of the third and final unresolved EC issue, which we inherited as
a 1990's legacy in the acquisition of Coats, the administrative "fine" of €110
million is totally disproportionate and irreconcilable with the facts as known
to us.
Perversely, that is also the good news. We believe that this amount will
eventually be proved unsustainable, even to the extent of a complete reversal of
the initial finding, when it is eventually subject to higher levels of EC
scrutiny.
A substantial provision continues to be held in Coats' accounts but not for the
full amount of €110 million, which reflects the considered view of the Board and
its advisers regarding the ultimate outcome.
Otherwise, Coats' trading continued the improvement noted in previous reports.
The industrial thread business is now starting to show the benefit of the
massively expensive restructuring exercise both before and after the GPG
acquisition.
Crafts was relatively weak in 2007 but this is a very well established operation
and it is only a matter of time before profits return to more normal levels.
Coats' detailed results for the year and Chairman's Review are available at
www.coats.com or a printed copy can be obtained from any GPG office.
Coats' financial profile at 31 December 2007 is:
£m
Fixed assets 272
Intangibles 149
Net current assets 144
____
565
Net debt (183)
Provisions (100)
Minorities (9)
____
SHAREHOLDERS' FUNDS £273
____
BALANCE SHEET
GPG remains in a strong financial position as shown in the Simplified Balance
Sheet below.
As always, there is a high level of liquidity, which is particularly reassuring
in the present climate of renewed emphasis on corporate stability.
SIMPLIFIED BALANCE SHEET AS AT 31 DECEMBER 2007
£m
Cash at Bank 261
Debtors 43
Coats 273
Canberra Investment Corp 21
Turners & Growers 53
Capral 56
Tower Australia 88
Tower NZ 34
Rattoon 34
Greens Foods 16
Share portfolio 330
____
TOTAL ASSETS 1,209
Creditors (42)
Note issues (216)
____
SHAREHOLDERS' FUNDS £951
____
The unrealised portfolio surplus was down quite sharply at 31 December, partly
due to the AWM and Premier sales and, also, the overall slide in share prices
which began in late 2007 and has, so far, extended into the current term.
GPG is not unreceptive to the changed environment because the vast majority of
our portfolio is in long term holdings where we are confident of the real value
regardless of market fluctuations. In fact, we are now seeing buying
opportunities which have not been available for some time past. The ultimate
outcome of the present market turmoil should be actively favourable for GPG.
PORTFOLIO INVESTMENTS - Unrealised surplus before tax
£m
Unrealised surplus as at 31 December 2006 192
Realised during 2007 (129)
____
63
Net increase during 2007 34
____
Balance at 31 December 2007 £97
____
The above table does not include investments in subsidiary and associated
companies (Canberra Investment Corp, Capral, Maryborough Sugar, Rattoon, Tower
Australia, Turners & Growers and Autologic) which are carried at book value and
would otherwise reduce the surplus by £3 million.
CAPITAL AND DIVIDEND
The Board has declared the standard 1p dividend and 1 for 10 bonus issue (the
15th in succession, multiplying an original 1990 holding 4.2 times). The share
election scheme is available and will operate in lieu of a cash dividend at the
rate of 1 new share for each 60 already held.
OUTLOOK
2008 will be a significant year for GPG in developing the challenge of
incremental value realisation referred to in last year's Annual Report.
Ron Brierley
CHAIRMAN
28 February 2008
Guinness Peat Group plc
Consolidated Income Statement
Unaudited Audited
Year ended 31 December 2007 2006
£m £m
______________________________________________________________________________________________________________________
Continuing Operations
Revenue 1,319 1,356
Cost of sales (911) (956)
________ ________
Gross profit 408 400
Profit on disposal of investments and other net investment income 145 45
Distribution costs (163) (177)
Administrative expenses (235) (196)
________ ________
Operating profit 155 72
Share of loss of joint ventures (3) -
Share of profit/(loss) of associated undertakings 11 (1)
Profit on sale of business - continuing operations 25 5
Finance costs (net) (38) (40)
________ ________
Profit before taxation from continuing operations 150 36
Tax on profit from continuing operations (32) (12)
________ ________
Profit for the year from continuing operations 118 24
Discontinued Operations
Gain on discontinued operations 8 10
________ ________
Profit for the year 126 34
======== ========
Attributable to:
______________________________________________________________________________________________________________________
EQUITY HOLDERS OF THE PARENT 129 36
______________________________________________________________________________________________________________________
Minority interests (3) (2)
________ ________
126 34
======== ========
Earnings per Ordinary Share from continuing and discontinued operations:
Basic 10.21p 2.89p
Diluted 8.86p 2.54p
Earnings per Ordinary Share from continuing operations:
Basic 9.60p 2.08p
Diluted 8.38p 1.84p
Guinness Peat Group plc
Consolidated Balance Sheet
Unaudited Audited
31 December 2007 2006
£m £m
NON-CURRENT ASSETS
_______________________________________________________________________________________________________________________
Intangible assets 204 198
Property, plant and equipment 414 391
Investments in associated undertakings 149 122
Investments in joint ventures 45 17
Fixed asset investments 328 417
Derivative financial instruments 4 6
Deferred tax assets 8 6
Pension surpluses 34 32
Trade and other receivables 18 18
________ ________
1,204 1,207
________ ________
CURRENT ASSETS
_______________________________________________________________________________________________________________________
Inventories 227 216
Trade and other receivables 254 238
Current asset investments 12 19
Derivative financial instruments 5 3
Cash and cash equivalents 318 254
________ ________
816 730
________ ________
Non-current assets classified as held for sale 5 3
________ ________
TOTAL ASSETS 2,025 1,940
________ ________
CURRENT LIABILITIES
_______________________________________________________________________________________________________________________
Trade and other payables 294 254
Current income tax liabilities 10 9
Capital notes 83 -
Other borrowings 94 123
Derivative financial instruments 4 -
Provisions 84 87
________ ________
569 473
________ ________
NET CURRENT ASSETS 247 257
________ ________
NON-CURRENT LIABILITIES
_______________________________________________________________________________________________________________________
Trade and other payables 15 21
Deferred tax liabilities 17 18
Capital notes 133 201
Other borrowings 168 150
Retirement benefit obligations:
Funded schemes 1 14
Unfunded schemes 51 58
Provisions 26 37
________ ________
411 499
________ ________
TOTAL LIABILITIES 980 972
________ ________
NET ASSETS 1,045 968
======== ========
Guinness Peat Group plc
Consolidated Balance Sheet (continued)
Unaudited Audited
31 December 2007 2006
£m £m
EQUITY
_______________________________________________________________________________________________________________________
Share capital 64 57
Share premium account 61 61
Translation reserve 13 (24)
Unrealised gains reserve 94 188
Other reserves 295 303
Retained earnings 424 291
_______________________________________________________________________________________________________________________
EQUITY SHAREHOLDERS' FUNDS 951 876
_______________________________________________________________________________________________________________________
Minority interests 94 92
________ ________
TOTAL EQUITY 1,045 968
======== ========
Net asset backing per share * 74.63p 69.49p
======== ========
* The net asset backing per share at 31 December 2006 has been adjusted for the 2007 Capitalisation Issue.
Guinness Peat Group plc
Consolidated Statement of Recognised Income and Expense
Unaudited Audited
Year ended 31 December 2007 2006
£m £m
_______________________________________________________________________________________________________________________
Gains on revaluation of fixed asset investments 34 109
Losses on cash flow hedges (2) (2)
Exchange gains/(losses) on translation of foreign operations 38 (36)
Actuarial gains on retirement benefit schemes 7 9
________ ________
Net income recognised directly in equity 77 80
Transfers
Transferred to profit or loss on sale of fixed asset investments (129) (7)
Transferred to profit or loss on sale of businesses 1 -
Transferred to profit or loss on cash flow hedges (2) 1
Profit for the year 126 34
________ ________
Total recognised income and expense for the year 73 108
======== ========
Attributable to:
EQUITY HOLDERS OF THE PARENT 77 110
Minority interests (4) (2)
________ ________
73 108
======== ========
Guinness Peat Group plc
Reconciliation of Consolidated Movements in Equity Shareholders' Funds
Year ended 31 December 2007
Share
Share premium Translation Unrealised Other Retained
capital account reserve gains reserves earnings Total
reserve
£m £m £m £m £m £m £m
_______________________________________________________________________________________________________________________
Balance as at 1 January 2006 49 16 12 86 306 251 720
Total recognised income and expense
for the year - - (36) 102 - 44 110
Dividends (note 10) - - - - - (10) (10)
Capitalisation issue of shares 5 - - - (5) - -
Scrip dividend alternative - - - - - 6 6
Other share issues 3 45 - - - - 48
Share based payments - - - - 2 - 2
______________________________________________________________________________
Balance as at 31 December 2006 57 61 (24) 188 303 291 876
Total recognised income and expense
for the year
- - 37 (94) (3) 137 77
Dividends (note 10) - - - - - (11) (11)
Capitalisation issue of shares 7 - - - (7) - -
Scrip dividend alternative - - - - - 7 7
Share based payments - - - - 2 - 2
______________________________________________________________________________
Balance as at 31 December 2007 64 61 13 94 295 424 951
==============================================================================
Guinness Peat Group plc
Consolidated Cash Flow Statement
Unaudited Audited
Year ended 31 December 2007 2006
£m £m
_______________________________________________________________________________________________________________________
Cash inflow from operating activities
Net cash inflow from operating activities 255 151
Interest paid (49) (42)
Taxation paid (21) (18)
_______ _______
Net cash generated by operating activities 185 91
_______ _______
Cash outflow from investing activities
Dividends received from associated undertakings and joint ventures 10 5
Capital expenditure and financial investment (67) (82)
Acquisitions and disposals (41) (30)
_______ _______
Net cash absorbed in investing activities (98) (107)
_______ _______
Cash (outflow)/inflow from financing activities
Issue of ordinary shares 1 48
Equity dividends paid to the Company's shareholders (4) (4)
Dividends paid to minority interests (4) (4)
(Decrease)/increase in debt (14) 9
_______ _______
Net cash (absorbed in)/generated by financing activities (21) 49
_______ _______
Net increase in cash and cash equivalents 66 33
Cash and cash equivalents at beginning of the year 241 238
Exchange gains/(losses) on cash and cash equivalents 2 (30)
_______ _______
Cash and cash equivalents at end of the year 309 241
======= =======
Guinness Peat Group plc
NOTES TO FINANCIAL INFORMATION
1. The preliminary financial information has been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the Group, and complies with the disclosure requirements of the Listing Rules of
the UK Financial Services Authority and the Listing Rules of the Australian Securities Exchange. The accounting
policies adopted have been consistently applied to all periods presented.
2. The financial information set out in this announcement does not constitute the Group's statutory accounts for the
years ended
31 December 2007 and 2006. The financial information for the year ended 31 December 2006 is derived from the
statutory accounts for that year, which have been filed with the Registrar of Companies. The auditors reported on
those accounts and that report was unmodified and did not contain statements under Section 237(2) or (3) of the
Companies Act 1985.
Whilst the financial information included in this announcement has been compiled in accordance with the
recognition and measurement principles of applicable IFRS, this announcement does not itself contain sufficient
information to comply with IFRS. GPG expects to publish full financial statements that comply with IFRS and these
will be available to shareholders in April 2008.
The financial information in this report is unaudited. However, the auditors anticipate issuing a modified audit
opinion which, without qualifying their opinion, will contain an emphasis of matter paragraph to highlight the
significant uncertainty in relation to the European Commission competition investigation into alleged market
sharing agreements relating to the European haberdashery market. Further details relating to this matter are set
out in Note 11.
3. Group foreign exchange movements - during the year ended 31 December 2007, GPG recognised in operating profit £8
million of net foreign exchange losses which compares to £3 million of net foreign exchange gains in the year
ended
31 December 2006.
4. Tax on profit from continuing operations
2007 2006
£m £m
UK Corporation tax at 30% - -
Overseas tax (26) (21)
___________________________
(26) (21)
Deferred tax (6) 9
___________________________
(32) (12)
___________________________
5. Associate and joint venture entities
The Group's significant associate and joint venture entities are as
follows:
2007 2006
Green's General Foods Pty Ltd 72.5% na
Australian Country Spinners Ltd 50.0% 50.0%
Rattoon Holdings Ltd 44.4% 44.8%
The Maryborough Sugar Factory Ltd 27.1% 24.3%
Tower Australia Group Ltd 26.9% 23.9%
Autologic Holdings plc 21.7% na
Nationwide Accident Repair Services na 31.3%
plc
Green's Foods Ltd na 37.6%
Autologic Holdings plc ("Autologic") became an associated undertaking in 2007, and contributed £1 million to
Group profit in the year to 31 December 2007. The carrying value of Autologic at 31 December 2007 amounted to £13
million. Green's General Foods Ltd ("Green's") became a joint venture in 2007, and contributed £2 million to
Group profit in the year to 31 December 2007. The carrying value of Green's at 31 December 2007 amounted to £16
million. Green's Foods Ltd and Nationwide Accident Repair Services plc both ceased to be associated undertakings
during 2007. Their contributions to the profit for the year ended 31 December 2007 amounted to £1 million (2006:
loss of £5 million) and £1 million (2006: £2 million) respectively.
Other significant contributions to the profit for the year from associate and joint venture entities were:
2007 2006
£m £m
Rattoon Holdings Ltd 5 -
Tower Australia Group Ltd 5 -
Australian Country Spinners Ltd (3) (2)
Guinness Peat Group plc
6. Other investments - Fixed asset investments within non-current assets are classified under IFRS as
available-for-sale investments, and current asset investments within current assets are classified under IFRS as
held-for-trading investments.
7. Earnings per share - The calculation of basic earnings per Ordinary Share from continuing and discontinued
operations is based on profit for the year attributable to equity shareholders of the parent and the weighted
average number of 1,269,191,224 Ordinary shares in issue during the year.
The calculation of basic earnings per Ordinary Share from continuing operations is based on profit for the year
from continuing operations attributable to equity shareholders of the parent and the weighted average number of
1,269,191,224 Ordinary shares in issue during the year.
The comparatives for the year to 31 December 2006 have been adjusted for the 2007 Capitalisation Issue.
8. The net tangible assets (net assets excluding intangible assets) per share at 31 December 2007 were 65.96p (2006:
61.03p).
9. Changes in the issued share capital during the year to 31 December 2007 comprise the following
£000
At 1 January 2007 57,310
Employee options exercised 209
Scrip dividend alternative shares issued (18 May 2007) 441
Capitalisation issue (22 June 2007) 5,780
At 31 December 2007 63,740
10. Dividends - The directors have approved the payment of an interim dividend of 1.00 pence per share payable on 19
May 2008 and making a total of 1.00 pence per share for the year. This is subject to a right for shareholders to
elect, instead of the cash dividend, to receive one new Ordinary share for every 60 existing shares held at the
appropriate record date. A final cash dividend of 0.91 pence per share (adjusted to reflect the 2007
Capitalisation Issue) in respect of the year ended 31 December 2006 was paid on 21 May 2007 to GPG shareholders.
There are local regulatory differences in the countries in which the Group's shares are listed, which can result
in different taxation treatment and timing. This may have a significant effect on the tax treatment of the
dividend for shareholders resident outside the UK. Shareholders are advised to obtain their own professional
advice.
The tax treatment of the cash dividend and the scrip dividend alternative, including the availability of tax
credits such as franking credits, will be dealt with more fully in a Circular which will accompany the Company's
Annual Report and Accounts (see note 12 below). Shareholders are recommended to obtain their own professional
advice.
11. European Commission Investigation - In September 2007, the European Commission concluded its investigation into
European fasteners - the last part outstanding of its general investigation into thread and haberdashery markets
which began in 2001. It imposed fines against several producers, including two fines against the Coats plc Group
("Coats") of €12.2 million and €110.3 million. Following legal advice, Coats has determined not to appeal the €
12.2 million fine, which was paid in December 2007. The €110.3 million fine is in respect of the Commission's
allegation of a market sharing agreement in the European haberdashery market. Coats totally rejects this
allegation, and is vigorously contesting the Commission's decision in an appeal which has been lodged with the
Court of First Instance in Luxembourg.
As stated in previous reports, the Group remains of the view that any anticipated eventual payment of the
remaining fines is adequately covered by existing provisions.
12. The Annual General Meeting of the Company (the "2008 AGM") will be held on 13 May 2008 to consider, amongst other
things, the 2008 Capitalisation Issue. Notice of the 2008 AGM will be incorporated in the Annual Report &
Accounts to be posted to shareholders in April 2008. A circular which will be posted to accompany the Notice of
the 2008 AGM will contain details of the Interim Dividend, the Scrip Dividend Alternative and the 2008
Capitalisation Issue. The shares representing the 2008 Capitalisation Issue cannot be allotted until shareholders
have given their approval at the 2008 AGM.
In order to accommodate the different market practices of the London Stock Exchange ("LSE"), Australian
Securities Exchange ("ASX") and New Zealand Stock Market ("NZSX"), being those markets on which GPG's shares are
quoted, and subject to approval of the Capitalisation Issue by shareholders, the Stock Events timetable will be
as follows*
Preliminary announcement of results, Interim Dividend and accompanying Scrip Dividend
Alternative and the proposed Capitalisation Issue
Thursday 28.02.08
Shares marked ex-dividend (ASX) Monday 03.03.08
Shares marked ex-dividend (LSE) Wednesday 05.03.08
Record date for dividend Friday 07.03.08
Head securities quoted ex-dividend (NZSX) Monday 10.03.08
Last date to post out Circular with Forms of Election for the Scrip Dividend Alternative Monday 14.04.08
Last date for receipt of 2008 AGM proxies (11.00am UK time) Friday 09.05.08
Final date for receipt of Scrip Dividend Alternative elections Monday 12.05.08
2008 AGM (11.00am UK time) Tuesday 13.05.08
Allotment of Scrip Shares (5.00pm UK time) Friday 16.05.08
Dispatch of FASTER mailings notifying NZ holders of the change in holdings following
the Scrip Dividend allotment Monday 19.05.08
Dispatch of Scrip Dividend holding statements (AUS) Monday 19.05.08
Dealings commence in Scrip Dividend Shares Monday 19.05.08
Dispatch of Scrip Dividend Share Certificates (UK) Monday 19.05.08
Update of UK CREST accounts (5.00am UK time) Monday 19.05.08
Payment of Cash Dividend** Monday 19.05.08
Shares marked Ex-Capitalisation on ASX and traded on deferred settlement basis Monday 19.05.08
Record date for Capitalisation Issue Friday 23.05.08
Head securities quoted Ex-Capitalisation (NZSX) Monday 26.05.08
Allotment of Capitalisation Shares (5.00pm UK time) Friday 30.05.08
Last day of deferred settlement trading on ASX Monday 02.06.08
Update of UK CREST accounts (5.00am UK time) Monday 02.06.08
Post out Capitalisation Share Certificates (UK) and holding statements (AUS) Monday 02.06.08
Shares marked Ex-Capitalisation in UK (LSE) Monday 02.06.08
Dispatch of FASTER statements in NZ notifying NZ holders of change in holdings Tuesday 03.06.08
following
Capitalisation Issue
Notes
* Actions take place on all three Exchanges on the date specified unless otherwise
indicated.
** The cash payment will be made to shareholders on the Australian and New Zealand share registers in
Australian and New Zealand dollars respectively, calculated at the rates of exchange ruling at 4:30pm (UK
time) on 12 May 2008. Shareholders on all three registers will have the opportunity to elect for one of
the other two currencies, and a circular containing further information and a currency election form will
be circulated at the same time as the Notice of AGM is posted.
To ensure the integrity of the three registers over record dates and 'ex' dates, they may be closed for
transmissions between them at certain times.
Guinness Peat Group plc
13. Directors - The following persons were directors of GPG during the whole of the year and up to the date of this
report:
Sir Ron Brierley
G J Cureton
A I Gibbs
B A Nixon
Dr G H Weiss
14. Directors' Report - The Chairman's Statement appearing in the Preliminary Results and signed by Sir Ron Brierley
provides a review of the operations of the Group for the year ended 31 December 2007.
15. Director's Declaration - In accordance with a resolution of the directors of Guinness Peat Group plc I state
that:
In the opinion of the Directors:
a) The Preliminary Results of the consolidated entity:
(i) give a true and fair view of the financial position as at 31 December 2007 and the performance of the
consolidated entity for the year ended on that date; and
(ii) comply with the recognition and measurement principles of applicable International Financial Reporting
Standards as adopted by the Group; and
b) There are reasonable grounds to believe the Company will be able to pay its debts as and when they become due
and payable.
16. Publication - This statement will be available at the registered office of the Company, First Floor, Times Place,
45 Pall Mall, London SW1Y 5GP. A copy will also be displayed on the Company's website on www.gpgplc.com.
On behalf of the Board
B A Nixon
Director
28 February 2008
UNITED KINGDOM
_______________________________________________________________________________________________________________________
First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP Tel: 020 7484 3370 Fax: 020 7925 0700
AUSTRALIA
_______________________________________________________________________________________________________________________
Registries Ltd Tel: 02 9290 9600 Fax: 02 9279 0664
PO Box R67, Royal Exchange, Sydney NSW 1224, Australia
NEW ZEALAND
_______________________________________________________________________________________________________________________
c/o Computershare Investor Services Limited
Private Bag 92119, Auckland 1020, New Zealand Tel: 09 488 8700 Fax: 09 488 8787
Registered in England No. 103548
PRELIMINARY REPORT OF GUINNESS PEAT GROUP PLC ("GPG")
FOR THE YEAR ENDED 31 DECEMBER 2007
GPG results for announcement to the Market for the year ended 31 December 2007.
Please note the following key information:
* Revenue decreased by £37 million (2.7%) over the corresponding period in 2006;
* Profit from ordinary activities after tax attributable to members
£129 million - an increase of £93 million (258.3%) from the previous year;
* Net profit for the year attributable to members £129 million - an increase of
£93 million (258.3%) from the previous year;
* Gains of £129 million realised on portfolio investments during the year;
* 1.0p interim dividend has been declared for the year, payable on 19 May
2008 to shareholders on the register as at 7 March 2008 (0.91p paid during the
year in respect of the year ended 31 December 2006, as adjusted for the 2007
capitalisation issue);
* The record date for entitlement to dividend is 7 March 2008. See note 10 to
the Notes to the Preliminary Results; and
* These Preliminary Results are based on financial information for the year
ended 31 December 2007 which is in the process of being audited.
J R Russell
Group Company Secretary
28 February 2008
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